Chennai Police Arrests former IL&FS Group Head Ravi Parthasarathy In 1 lakh crore IL&FS scam

The Economic Offences Wing of the Tamil Nadu Police has arrested Ravi Parthasarathy, 69, former head honcho of the IL&FS Group in connection with alleged cheating of a Chennai-based private limited company of ₹200 crore through IL&FS Transportation Networks India Ltd (ITNL), Mumbai.

"The king pin and the mastermind of the 1 lakh crore IL&FS scam Mr. Ravi Parthasarathy has been arrested by EOW in connection with Crime No.13 of 2020 dated 20.09.2020," said a statement issued by EOW Chennai.

"The accused, Ravi Parthasarathy, is the former Chairman and Managing Director of the entire IL&FS Group. The IL&FS Group, which consists of more than 350 group companies, was used as a vehicle to perpetrate fraud by then management of IL&FS Group which was headed by the then Chairman and MD-CEO Ravi Parthasarathy," said the EOW.

Parthasarathy had previously served as CEO of Housing Development Finance Corporation (HDFC) Bank for close to 25 years. Parthasarthy later founded IL&FS-a major infrastructure financing and construction company, which served as a 'shadow bank' or a non-banking financial company that provides services similar to traditional commercial banks.

Parthasarathy, who is said to be the close confidant of former Finance Minister P Chidambaram, was at the helm of IL&FS for over 25 years. He is accused of masterminding one of the largest financial frauds and systematically driving a behemoth of a financial institution to financial ruins.

The EOW stated that the FIR has been registered in connection with the complaint given by 63 moons Technologies Ltd, which lost a sum of Rs 200 crore. Complaints from various other depositors have also been received by the EOW.

The Economic Offences Wing of the State police had last January arrested Ramchand Karunakaran, former managing director, and Hari Sankaran, former vice-chairman and director of ITNL, who were also cited as accused in this case.

The scam at IL&FS came to light in 2018 after several group entities defaulted on repayments due to severe liquidity problems. Two of its subsidiaries defaulted on repayment of loans and inter-corporate deposits to lenders.

In October 2018, the Union government moved a petition before the National Company Law Tribunal (NCLT) seeking to supersede the board of IL&FS and appoint a new one chaired by the well-known banker, Uday Kotak. The petition was granted by the NCLT. A full-time vice chairman and managing director has since been appointed. The board was asked to submit a road map for the revival of the IL&FS

The Government in its petition has mentioned, "Ravi Parthasarathy and his team were responsible for the negligence, incompetency and misleading the public by presenting rosy financial statements. IL&FS was camouflaging its financial statements by hiding a severe mismatch between its cash flows and payment obligations. It was also hiding total lack of liquidity and glaring adverse financial ratios."

The forensic audit by Grant Thornton also revealed a bevy of illegal practices, bribing of credit rating agencies and other fraudulent practices, indicating clearly the involvement of the then IL&FS Group Chairman Parthasarathy.